Exporting back to ArcScene
The answer to this question basically comes down to processing power and patience. The error I state above was solved by closing the program and trying again. The other issues come down to making sure that the normals are correct in Blender which was addressed by this question.

Making sure the computer has enough memory to cache all the data require is a must, I found that computers with more RAM and processing power could handle transforming shapes with higher face counts into multipatches. Having said that I suspect there may be a limit of about 50,000, but have yet to confirm this.